Interest rate changes are unavoidable in the present volatile economic climate. Additionally, it may impact several financial products, especially housing loans. Customers may need help managing their loan installments when interest rates on housing loans are rising.
Proactive actions and thoughtful preparation, however, can lessen the effects of rising interest rates and guarantee financial security. In the following paragraphs, we’ll go over practical methods and advice.
How Can the Interest Rate on a Home Loan be Lowered?
Many people have the ambition of owning their own home, but it is extremely expensive. Despite your best efforts to save, the rapidly rising cost of real estate may prevent you from having sufficient funds for it. Nevertheless, a home loan might make this dream a reality.
You run the risk of getting into financial trouble if you don’t have a good plan. First, know what you’re aiming for. You may have to pay unnecessary interest rates due to not planning properly. You can choose wisely by considering the following advice and coming to a choice after reading it. Here you will get some recommendations on how to lower your interest rates.
Benefits of Having a Housing Loan
These are Some of the Home Loan Benefits:
- The feeling of achievement. Having a property in your asset category is just as satisfying as receiving a promotion after many years of laborious effort.
- Home loans with low interest rates are highly appealing to new homeowners.
- The adjustable tenures that several banks offer make it simpler to repay your house loan.
- Take advantage of tax breaks on the principal and interest amounts.
Negative aspects of Taking Out a Housing Loan:
Home loans are an excellent option provided by banks. But these have some negative aspects.
- The deductible on EMIs can last for 10 to 15 years. This may become an unnecessary pain point.
- Home loans place a significant burden on one’s financial situation.
- Because property values are volatile, fluctuations can cause properties to not yield the expected returns.
It is crucial that each borrower carefully considers these factors before asking for a housing loan to determine whether a home loan is right for them.
How to Lower the Interest Rate on a Home Loan
Here are six easy-to-implement yet effective ways to reduce the amount you pay for your housing loan.
Here are 7 Tried-and-True Tactics!
1. Strengthen your Credit Score
One of the most crucial elements that every lender takes into account is your credit score. The interest rate will be lowered the higher your credit score is. Because of this, borrowers must keep their credit score high.
This can be achieved by making on-time bill payments. Maintaining a low credit utilization ratio, avoiding multiple loan applications at once, and avoiding opening an excessive number of credit accounts will also help to build good credit.
2. Select a Suitable Loan Term
The length of time you will be repaying your housing loan is known as the loan term. The Equated Monthly Installment (EMI) will be cheaper for a longer tenure, but the total amount of interest paid will probably be higher.
You must take into account all of your financial commitments and select the best payback period for you. Once more, you may choose the ideal term for the housing loan by using the EMI calculator. There can be additional fees involved. You always have options about making prepayments to shorten the length of your loan and save money on interest.
The Best Home Loan Offers 2024
| Bank | Loan Amount | Loan Tenure | Rate of Interest (Reducing Per Annum) | CIBIL Score | Processing Fees |
| HDFC Bank Home Loans | 5.00 Lacs and above | 5 Years – 25 Years | 8.45% – 10% | 650 or above | 0.5% – 1% |
| Kotak Bank Home Loan | 20.00 Lacs and above | 5 Years – 20 Years | 8.75% – 10% | 700 or above | 0% – 0.25% |
| Bank of India Home Loan | 10.00 Lacs and above | 5 Years – 30 Years | 8.5% – 10.75% | 675 or above | 0.25% – Rs.10000 |
| Bajaj Housing Finance Home Loan | 5.00 Lacs – 75.00 cr | 5 Years – 25 Years | 8.45% – 10% | 650 or above | 0.2% – 0.5% |
| PNB Housing Home Loan | 5.00 Lacs – 20.00 cr | 5 Years – 30 Years | 8.75% – 14% | 625 or above | 0.25% – Rs.10000 |
| Mahindra Finance Home Loan | 3.00 Lacs – 75.00 Lacs | 5 Years – 25 Years | 9% – 15% | 650 or above | 1% – 3% |
| Tata Capital Home Loan | 30.00 Lacs – 7.00 cr | 10 Years – 30 Years | 8.6% – 11% | 750 or above | 0.2% – 0.5% |
| Aditya Birla Home Loan | 25.00 Lacs – 25.00 cr | 5 Years – 25 Years | 8.9% – 11% | 675 or above | 0.5% – 1% |
| Federal Bank Home Loan | 50.00 Lacs – 20.00 cr | 5 Years – 25 Years | 8.5% – 10% | 675 or above | 0.5% – Rs.13000 |
| IDFC Bank Home Loan | 10.00 Lacs – 5.00 cr | 1 Years – 30 Years | 8.85% – 9.25% | 680 or above | 1% – 1.5% |
| ICICI Bank Home Loan | 50.00 Lacs and above | 5 Years – 30 Years | 8.6% – 10% | 700 or above | 0.25% – 0.5% |
| Standard Chartered Home Loan | 25.00 Lacs – 25.00 cr | 5 Years – 25 Years | 8.5% – 10% | 700 or above | 0.5% – 1% |
| SBI Bank Home Loan | 10.00 Lacs and above | 5 Years – 30 Years | 8.5% – 10.4% | 650 or above | 0% – Rs.10000 |
| Bank of Maharashtra Home Loan | 10.00 Lacs and above | 5 Years – 30 Years | 8.5% – 9.65% | 675 or above | 0.25% – 0% |
| Indian Bank Home Loans | 10.00 Lacs and above | 5 Years – 30 Years | 8.5% – 10.4% | 675 or above | 0.25% – 0% |
| Union Bank of India Home Loan | 10.00 Lacs and above | 5 Years – 30 Years | 8.5% – 10.8% | 675 or above | 0% – Rs.15000 |
| Central Bank of India Home Loan | 10.00 Lacs and above | 5 Years – 30 Years | 8.5% – 10.4% | 700 or above | 0% – Rs.20000 |
| Bajaj Finserv Home Loan | 20.00 Lacs – 15.00 cr | 5 Years – 40 Years | 8.5% – 10% | 700 or above | 0.2% – 0.5% |
| L & T Finance Services Home Loan | 30.00 Lacs – 3.00 cr | 5 Years – 30 Years | 8.5% – 9.5% | 650 or above | 0.25% – Rs.10000 |
| IIFL Bank Home Loan | 5.00 Lacs – 50.00 Lacs | 5 Years – 25 Years | 8.9% – 14% | 650 or above | 1% – 1.25% |
3. Select an Interest Rate That Floats
Fixed or floating interest rates are available for home loans. Floating interest rates vary according to the circumstances of the market. Fixed rates stay the same throughout the loan term. In general, floating rates are less expensive than fixed rates. But nothing is sure; interest rates are subject to change, and if they rise, you might have to pay more.
4. Make a Bargain with your Lender
We Indians are great negotiators. Yet a lot of borrowers fail to follow through by not negotiating a higher interest rate with their chosen lender. If you have a solid salary, strong credit, and a history of timely repayment, you can always bargain.
Building bonds is never harmful, after all. You can also use your relationship with the financial institution, which will be leveraged to your advantage. Examples of such relationships include long-standing accounts and salary accounts.
5. Make a Big Down Payment
A down payment is the total amount you pay upfront when applying for a loan. This is going to have a significant impact on the interest rate at which you’re required to pay the outstanding balance. You can borrow less money with a larger down payment. This will naturally lower your interest rate and EMI. A sizable down payment additionally demonstrates to the lender how serious you are about paying back the housing loan.
6. Switch your Housing loan to Another Lender
You might think about switching your home loan to a different lender that offers a cheaper interest rate. If you have been making your repayments on time, you can go with this option.
7. Switch a Variable Rate from a Fixed Rate
You have likely been paying higher interest rates if your home loan has a fixed rate. To take advantage of any fluctuations or decreases in interest rates, switching to a variable interest rate would be beneficial.
These Will Help Borrowers Handle Rising Housing Loan Interest Rates with Assurance.
Track Market Trends: Keep up with changes in interest rates and the current situation of the market. To predict future changes in housing interest rates, keep a close eye on industry projections. Central bank policies and economic statistics will help you a lot to become familiar with these matters.
Determine Your Level of Financial Preparation: Check all aspects of your financial status. These are your earnings, outlays, savings, and outstanding debts. Determine how much of an impact rising interest rates will have on the amount you spend every month. Also, check if you can afford the higher EMIs that arise from them.
Refinancing or Renegotiating: To get a reduced interest rate, you may want to think about refinancing your current housing loan. You can also think about renegotiating interest rates with your financial institution. Check out alternatives to refinancing with competitive rates and favorable terms by comparing offers from several lenders.
Select Loans with Fixed Rates: In volatile interest rate conditions, moving from a floating rate to a fixed-rate housing loan can offer stability. By locking in a predefined interest rate for a certain amount of time, fixed-rate loans protect against interest rate increases and guarantee consistent monthly payments for the duration of the loan.
Boost EMI Payments: To expedite loan repayment and lower the total interest load, think about raising your EMI payments. By lowering the principal sum owed, higher installment payments not only reduce the loan’s term but also lessen the effect of increasing interest rates.
Develop an Emergency Fund: Set aside money for unforeseen costs or volatility in income. In hard times, having an emergency fund allows you to stay afloat financially and make loan payments on schedule.
Investigate Interest Rate Hedging: To protect yourself from interest rate risk, investigate financial tools like interest rate swaps and derivatives. These tools can be used to control exposure to growing interest rates and provide protection against unfavorable changes in interest rates.
Seek Expert Advice: To learn more about your options and tactics for handling rising housing loan interest rates, Speak with financial institution professionals and financial consultants. You may make smart choices that are specific to your financial situation and aspirations with the assistance of a professional.
Borrowers may have difficulties as a result of rising housing loan interest rates. However, proactive preparation and wise money management can lessen the effects and help people get through unpredictable economic times.
Achieving financial security over the long run and effectively managing home loan commitments can be accomplished by borrowers through strategic methods. These are evaluation of financial preparedness, exploration of refinancing options, and being alert. Ensure that your decisions are adequate and in accordance with your financial goals. Don’t forget to thoroughly consider your options and consult an expert.
Bottom Line
Lower interest rates on home loans can result in significant cost savings for you. You may reduce home loan interest rates while simultaneously making your loan much more inexpensive by sticking to these six practical tips. In conclusion, keep your credit score high.
Select the appropriate loan term, opt for a rate that fluctuates. Then bargain with your lender, and try to make a big payment as your down payment. Think about shifting your housing loan to a different lender. To figure out the ideal loan term and EMI for your financial situation, you may check through EMI Calculators.
Monthly EMIs for a housing loan deduct a significant amount from your income. Therefore, during most of your employment years, paying a sizable amount of your income can have an impact on your financial condition.
It is crucial to lower the interest rate on a housing loan to lower its cost. Shorter loan terms lead to quicker loan payback, which lowers interest rates.